Hochmetal Africa (PTY), Ltd. v. Metals, Inc.

566 S.W.2d 715, 1978 Tex. App. LEXIS 3300
CourtCourt of Appeals of Texas
DecidedMay 18, 1978
DocketNo. 1370
StatusPublished
Cited by5 cases

This text of 566 S.W.2d 715 (Hochmetal Africa (PTY), Ltd. v. Metals, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hochmetal Africa (PTY), Ltd. v. Metals, Inc., 566 S.W.2d 715, 1978 Tex. App. LEXIS 3300 (Tex. Ct. App. 1978).

Opinions

OPINION

YOUNG, Justice.

This is a plea in abatement case. Plaintiffs, Hochmetals Africa (PTY), Ltd.; Con-ibero Corporation; and their agent, Samin-corp, Inc., sued defendants, Metals, Inc.; Metals Incorporated Overseas Export Corporation; Ed Mange; The First State Bank of Corpus Christi; E. W. Schrader, Trustee; and Robert Rome, in tort for breach of a fiduciary duty and conversion; to impress a constructive trust on certain property; and to enjoin defendants from selling the involved property at a non-judicial foreclosure sale.

On April 28, 1978, a hearing on an application for a temporary injunction was held. On this date, defendants The First State Bank of Corpus Christi and E. W. Schrader, Trustee, filed a plea in abatement requesting that plaintiffs’ cause be dismissed. Defendants, in their plea in abatement, contended that plaintiffs’ original petition did not affirmatively allege that plaintiffs, purportedly foreign corporations, had obtained a certificate of authority to do business in Texas, or that said corporations were authorized to do business in Texas under the laws of the State of Texas. Defendants further contended that they had communicated with the Office of the Secretary of State of the State of Texas and had been advised that none of the said corporations above had been issued a certificate of authority to do business in the State of Texas.

The trial court, upon considering only the pleadings of the parties and oral argument of counsel and without the introduction of any evidence, sustained defendants’ plea in abatement and dismissed plaintiffs’ cause.

The petition in question herein alleges: that the plaintiffs are foreign corporations; that on April 2, 1976, they agreed to purchase scrap metal from the defendants; that they advanced certain monies to the defendants in order to secure the purchase of the scrap metal; and that the defendants instead of shipping the scrap metal, used [717]*717the money to secure the purchase of certain machinery upon which the plaintiffs now assert should be impressed with a constructive trust. Nothing appears in the plaintiffs’ petition which indicates whether or not the plaintiffs have a permit to do business in Texas. Furthermore, nothing appears in the petition to characterize this transaction as interstate. Nor does the petition state that the transaction was intrastate. The only provision in the petition which might even remotely bear upon the nature of the transaction states:

“II.
For some fifteen years prior to April, 1976, plaintiffs had purchased scrap metal from defendants Metals, Inc. and Metals Overseas. These purchases had always been made for resale, a fact well known to defendants, Metals, Inc. and Metals Overseas.”

Plaintiffs bring two points which, taken together, contend the trial court erred in sustaining defendants’ plea in abatement because no evidence was offered to show that plaintiffs were transacting intrastate business. We agree.

Tex.Bus.Corp.Act Ann. art. 8.01 (1956) provides in pertinent part:

“A. No foreign corporation shall have the right to transact business in this State until it shall have procured a certificate of authority so to do from the Secretary of State. .
B. Without excluding other activities which may not constitute transacting business in this State, a foreign corporation shall not be considered to be transacting business in this State, for the purposes of this Act, by reason of carrying on in this State any one (1) or more of the following activities:
* * * * * *
(9) Transacting any business in interstate commerce.”

Further, Tex.Bus.Corp.Act Ann. art. 8.18 (1956) provides in pertinent part:

“A. No foreign corporation which is transacting, or has transacted, business in this State without a certificate of authority shall be permitted to maintain any action, suit, or proceeding in any court of this State ... on any cause of action arising out of the transaction of business in this State, until such corporation shall have obtained a certificate of authority. . . . ”

The predecessor to Article 8.18 was Article 1536, V.A.C.S. Article 1536 was held to proscribe only suits upon intrastate transactions. Rosenthal v. American Photocopy Equipment Co., 333 S.W.2d 448, 449 (Tex.Civ.App.—Houston 1960, writ dism’d); Continental Supply Co. v. Hoffman, 135 Tex. 552, 144 S.W.2d 253 (Tex.Com.App.1940, opinion adopted). “The effect of Article 8.18 of the Business Corporation Law is the same in this regard; that is, it only forbids suits on intrastate transactions. Even though the corporation be doing business without a permit, the statute does not forbid suits on interstate transactions.” Rosenthal v. American Photocopy Equipment Co., supra at 449, Continental Supply Co. v. Hoffman, supra.

In this connection, where the plaintiffs’ petition alleges that it is a foreign corporation, as here, and does not disclose the absence of a permit, and does not disclose that the cause of action is intrastate, the burden is on the defendant to allege and prove the necessity of a permit and that the corporation has no permit. Rosenthal v. American Photocopy Equipment Co., supra at 449, Continental Supply Co. v. Hoffman, supra; Chase Bag Co. v. Stafford, 120 S.W.2d 823 (Tex.Civ.App.—Texarkana 1938, no writ); See also Jay-Lor Textiles, Inc. v. Pacific Compress Warehouse Company, 547 S.W.2d 738 (Tex.Civ.App.—Corpus Christi 1977, writ ref’d n. r. e.).

Defendants contend that the provision in plaintiffs’ petition regarding past transactions with the defendants prevents the application of the above rule because it shows that plaintiffs are transacting business in Texas. We disagree. First, the petition does not indicate that plaintiffs were or are transacting business in Texas; i. e., it does not show the nature of these prior transactions. Without such informa[718]*718tion all of the prior transactions could have conceivably been interstate transactions and would not constitute transacting business in Texas. See Tex.Bus.Corp.Act Ann. art. 8.01 B(9) (1956). Second, assuming that the provision in the petition did show that plaintiffs were transacting business in Texas, we would still be compelled to apply the above rule set out in Rosenthal The vice in plaintiffs’ case must appear affirmatively in their petition; i. e., it must show the transaction sued upon was intrastate in nature to invoke the restrictions of Article 8.18. Oklahoma Tool & Supply Co. v. Daniels, 290 S.W. 727, 728 (Tex.Com.App.1927, jdgmt. adopted); Barton v. Kansas City Life Ins. Co., 98 S.W.2d 836, 841 (Tex.Civ.App.—Fort Worth 1936, no writ); Rosenthal v. American Photocopy Equipment Co., supra.

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566 S.W.2d 715, 1978 Tex. App. LEXIS 3300, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hochmetal-africa-pty-ltd-v-metals-inc-texapp-1978.